Invest in Singapore properties: DBS OCBC Maybank eases credit

Invest in Singapore properties: DBS OCBC Maybank Eases Credit
Article contributed by: www.PropertyBUYER.com.sg

DBS Singapore term loans - Equity loans (loan to valuation) has been revised from 70% to 80% starting January 2010.

OCBC bank Singapore term loans - equity loans (loan to valuation) has been revised from 70% to 80% starting January 2010.

Maybank has raised the lending limit from 80% to 90% loan to valuation.

Note: Monetary Authority of Singapore allows banks to lend up to 90% of the valuation of a Property, but not all banks offer 90% loans.


Term loans are also known as equity loans. These type of loans allow property owners to take cash out of a property whose valuation have risen by refinancing these properties.


How Singapore Property term - equity loans work

For example (if CPF is not used)



A property which was bought for $1m dollars with an outstanding loan of 800k.



If the property valuation increases to $1.2m, this Singapore property owner can go to a bank to refinance their home loans. At $1.2m valuation and at a Loan to valuation of 80%, the bank can lend you $960,000.



If your new possible loan size is $960,000 that means you will be able to refinance your $800,000 home loan + a term loans (or equity loan) for $160,000.



This immediately avails $160,000 (after 12 weeks) of cash if your income can support $960,000 of loan quantum.



These cash out is not allowed for down payment for another property.



The actual impact or increase in liquidity is likely to be limited. These lending changes are not announced openly, as a result, they are not likely to lead to people suddenly going to the bank to apply to Singapore property buyer with “cash out”.



In Singapore Monetary Authority of Singapore do not make a lot of announcements unlike the federal reserve in the USA.



Therefore if we use DBS as a proxy for the Singapore government's policies, it does possibly infer a credit easing stance, albeit a very minor one. This could mean that credit and financial risks have abated and the climate is more positive for lending or it could be just a minor adjustment to keep Term loan and home loan maximum Loan to valuation cap in-line with home loans loan-to-valuation caps.



Easing of Credit typically fuel property asset prices.



What does it mean for Singapore property investors and buyers alike?



We do not think this is a big tide of change, rather it should be taken as just one more positive signal (out of many other signals) for property buying rather than a definitive BUY signal.



PropertyBuyer.com.sg Mortgage Consultants have a panel of lawyers with whom we work closely with.

However we do NOT take legal fee kick-back (Many property agents refer you to a law firm in return for a fee, the law firms then charge you a higher rate to recoup the illegal commission paid to the Singapore property agents).

But in return for this partnership with the Conveyancing Lawyers which benefits the conveyancing lawyers more than it benefits us, we monitor their performance. We require the Singapore conveyancing lawyers to be expedient, work with integrity and care. These lawyers also have to highlight any risks as soon as they see it. Their charges also must be transparent and in-line with market rates. But you are free to choose your own lawyers.



How do Singapore Mortgage Consultants survive then?



Banks pay us a fee on successful loan transaction as we complement the banks and ease the work load of bankers on the front end. You don't have to pay us an entry fee, exit fee or subsription. It's totally Free and transparent.



We are able to keep our independence because we work with all the major banks.